3 May 2016

Negative market performance, substantial volatility, as well as underlying macroeconomic and geopolitical uncertainty, led to more pronounced client risk aversion and abnormally low transaction volumes in the first quarter. Some of these factors have stabilized recently, but the underlying macroeconomic challenges and geopolitical risks highlighted previously continue to contribute to client risk aversion and are unlikely to be resolved in the foreseeable future. Low interest rates, and the relative strength of the Swiss franc, particularly against the euro, continue to present headwinds. In addition, the proposed changes to the Swiss and international regulatory framework for banks will result in increased capital requirements and costs. UBS continues to execute its strategy with discipline to mitigate these effects, and is well positioned to benefit from even a moderate improvement in conditions.